Landesbank Hessen-Thüringen is pricing a Eu1bn five year benchmark at the tight end of guidance today (Wednesday), despite Pfandbrief spreads proving too punchy for some. Meanwhile, La Caixa reached Eu1.25bn on a five year cédulas yesterday with a little help from some Asian friends.

Helaba, Frankfurt

Landesbank Hessen-Thüringen (Helaba) opened books on its public sector-backed benchmark with guidance of 10bp-12bp over mid-swaps and leads BNP Paribas, Commerzbank, Deutsche Bank, Helaba and HSBC are set to price the new issue at 10bp over.

“The level seems fair,” said a syndicate official away from the leads. “It’s what we were showing them. It should go OK, although it’s no blow-out.”

He said that he understood they had been hoping to achieve a slightly tighter level, but that even at the 10bp-12bp guidance the tight levels of Pfandbriefe seemed punchy to many accounts.

“KfW did a five year at mid-swaps flat yesterday and the differential is quite small,” he said. “But this is something for those investors that aren’t so keen on peripheral credits.”

Another syndicate official away from the leads had also heard that investors had pushed back on a tighter spread.

“They tried to go for plus 9bp, but they didn’t manage to get there,” he said. “A few of the big guys were not willing to move, so they got stuck at 10bp.

“Nevertheless, overall the deal went well.”

La Caixa could reach a size of Eu1.25bn on a five year cédulas hipotecarias yesterday (Tuesday) after leads Barclays Capital, BNP Paribas, Credit Suisse, JP Morgan and La Caixa built a book of Eu1.6bn, comprising more than 100 orders.

“It was a good time to get the trade done,” said Dhiren Shah on Credit Suisse’s covered bond and SSA syndicate. “People know that there will be little supply for the rest of April, yet redemptions are high, so there’s a huge amount of cash to be put to work.

“Some people argued that it would be best to wait until May for La Caixa to issue, as people will not want to be long peripheral credits over the Easter break when there could be volatility and low levels of liquidity. At the same time, there continues to be a strong positive sentiment around Spain this week, and with possible supply pressures in May, La Caixa opted to pull the trigger with a new five year. This was the correct decision as can be seen by the need to upsize the trade to Eu1.25bn from a Eu1bn target size.”

Execution of the new issue came after the Spanish savings bank had last Tuesday held off coming to market with a six year deal, which had also been whispered at the 195bp area. Then, Deutsche Bank and HSBC were to have been on the top line, but they were not involved in yesterday’s deal and Credit Suisse and JP Morgan were added.

Germany and Austria were allocated 26.2% of the new five year issue, Spain 21.7%, France 20.4%, Asia 12%, the UK 10.5%, Switzerland 2.9%, Italy 1.8%, the Middle East 1.6%, the Benelux 1.4%, Scandinavia 1.1%, and others 0.4%. Funds took 34.9%, banks 31.4%, insurance companies and pension funds 18.8%, central banks 12.8%, corporates 1.6%, and others 0.5%.

A banker at one of the leads noted that the unusually high Asian share came on the same day that Chinese premier was reported as having told Spanish prime minister Jose Zapatero that China would invest in Spanish savings banks and continue buying Spanish government debt.

Coventry Building Society yesterday priced a £750m seven year sterling debut at 145bp over Gilts, after leads Barclays Capital and BNP Paribas had gone out with guidance of the 145bp-150bp over area.

A Yorkshire Building Society £750m seven year sterling issue priced at 153bp over Gilts last week was bid at 148bp over yesterday and a syndicate official at one of the leads said that Coventry’s execution was “a great achievement”.

“It went really well for a debut issuer,” he added.

The building society was able to reach its targeted size of £750m after leads Barclays Capital and BNP Paribas built a book of £1bn, comprising 52 accounts. While 75% was taken by UK accounts, 25% went to offshore buyers and the syndicate official said that this was “great news”.

The deal tightened 2bp after pricing and was this morning quoted at 143bp/138bp.

Correction: Yesterday we wrote that the pricing of the sterling issues was over mid-swaps; however, it was over Gilts, and we will endeavour to remember this in future when writing about sterling.